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Wall Street tumbled on Thursday terminating a four-day winning streak. Disappointing earnings results from a social media behemoth pulled back the revival of the broader technology sector. All three major stock indexes ended in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 1.4% or 518.17 points to close at 35,111.16. Notably, 25 components of the 30-stock index ended in red while 5 in green. The tech-heavy Nasdaq Composite finished at 13,878.82, plummeting 3.7% or 538.73 points due to weak performance by large-cap technology stocks. The tech-laden index posted its worst single day performance since September 2020.
Meanwhile, the S&P 500 slid 2.4% to end at 4,477.44, marking its worst daily performance since February 2021. Ten out of eleven sectors of the benchmark index closed in negative territory while one in green. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) plunged 6.7%, 3.1% and 2.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 10.2% to 24.35. A total of 10.85 billion shares were traded on Thursday, lower than the last 20-session average of 12.37 billion. The S&P 500 registered 29 new 52-week highs and six new 52-week low. The Nasdaq Composite posted 34 new 52-week highs and 149 new 52-week lows.
Social Media Stocks Tumble
On Feb 2, after the closing bell, social media behemoth Meta Platforms Inc. released disappointing earnings results for fourth-quarter 2021. Earnings of $3.67 per share missed the Zacks Consensus Estimate by 2.91% and decreased 5.4% year over year. However, revenues of $33.67 billion beat the Zacks Consensus Estimate by 1.51%.
Moreover, Meta expects total revenues between $27 billion and $29 billion for the first quarter of 2022, lower the market’s expectation. Increased competition for people’s time (strong adoption of services like TikTok) and a shift of engagement within Meta’s apps toward video offerings like Reels, which monetize at lower rates than Feed and Stories, is expected to hurt ad impressions growth.
The guidance reflects continuing headwinds from the changes made in iOS update that has made ad-targeting difficult, besides macroeconomic and COVID-related concerns. Cost inflation and supply chain disruptions are expected to impact advertiser budgets. Moreover, unfavorable forex is expected to hurt year-over-year growth.
Consequently, shares of Meta Platforms plunged 26.4%, marking its worst single-day decline in history. Shares of other social media giants like Snap Inc. (SNAP - Free Report) and Twitter Inc. tumbled 23.6% and 5.6%, respectively. Meta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Department of Labor reported that initial claims dropped by 23,000 to 238,000 for the week ended Jan 29, lower than the consensus estimate of 249,000. Previous week’s data was revised slightly upward from 260,000 to 261,000.
Continuing claims (those who have already received government aids and reported a week behind) dropped 44,000 to 1.63 million. The four-week moving average for claims, which helps adjust for weekly volatility, dropped to 1.62 million, the lowest total since Aug. 4, 1973.
The Institute of Supply Management reported that U.S. services index slid to a 11-month ow of 59.9% in January. The consensus estimate was 60. December’s reading was 62%. The rapid spread of Omicron variant of coronavirus was the primary reason for a drop in index’s reading.
Factory orders in December dropped by 0.4% compared with the consensus estimate of a drop of 0.3%. November’s data was revised upward from an increase of 1.6% to 1.8%.
Unit labor cost increased 0.3% in fourth-quarter 2021 compared with the consensus estimate of 1.3%. Third-quarter’s data was revised down to 9.3% from 9.6% reported earlier.
The preliminary estimate of nonfarm productivity in fourth-quarter 2021 jumped 6.6% compared with the consensus estimate of 3.6%. Third-quarter’s data was revised from a decline of 5.2% to a decline of 5%.
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Stock Market News for Feb 4, 2022
Wall Street tumbled on Thursday terminating a four-day winning streak. Disappointing earnings results from a social media behemoth pulled back the revival of the broader technology sector. All three major stock indexes ended in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 1.4% or 518.17 points to close at 35,111.16. Notably, 25 components of the 30-stock index ended in red while 5 in green. The tech-heavy Nasdaq Composite finished at 13,878.82, plummeting 3.7% or 538.73 points due to weak performance by large-cap technology stocks. The tech-laden index posted its worst single day performance since September 2020.
Meanwhile, the S&P 500 slid 2.4% to end at 4,477.44, marking its worst daily performance since February 2021. Ten out of eleven sectors of the benchmark index closed in negative territory while one in green. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) plunged 6.7%, 3.1% and 2.9%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 10.2% to 24.35. A total of 10.85 billion shares were traded on Thursday, lower than the last 20-session average of 12.37 billion. The S&P 500 registered 29 new 52-week highs and six new 52-week low. The Nasdaq Composite posted 34 new 52-week highs and 149 new 52-week lows.
Social Media Stocks Tumble
On Feb 2, after the closing bell, social media behemoth Meta Platforms Inc. released disappointing earnings results for fourth-quarter 2021. Earnings of $3.67 per share missed the Zacks Consensus Estimate by 2.91% and decreased 5.4% year over year. However, revenues of $33.67 billion beat the Zacks Consensus Estimate by 1.51%.
Moreover, Meta expects total revenues between $27 billion and $29 billion for the first quarter of 2022, lower the market’s expectation. Increased competition for people’s time (strong adoption of services like TikTok) and a shift of engagement within Meta’s apps toward video offerings like Reels, which monetize at lower rates than Feed and Stories, is expected to hurt ad impressions growth.
The guidance reflects continuing headwinds from the changes made in iOS update that has made ad-targeting difficult, besides macroeconomic and COVID-related concerns. Cost inflation and supply chain disruptions are expected to impact advertiser budgets. Moreover, unfavorable forex is expected to hurt year-over-year growth.
Consequently, shares of Meta Platforms plunged 26.4%, marking its worst single-day decline in history. Shares of other social media giants like Snap Inc. (SNAP - Free Report) and Twitter Inc. tumbled 23.6% and 5.6%, respectively. Meta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Department of Labor reported that initial claims dropped by 23,000 to 238,000 for the week ended Jan 29, lower than the consensus estimate of 249,000. Previous week’s data was revised slightly upward from 260,000 to 261,000.
Continuing claims (those who have already received government aids and reported a week behind) dropped 44,000 to 1.63 million. The four-week moving average for claims, which helps adjust for weekly volatility, dropped to 1.62 million, the lowest total since Aug. 4, 1973.
The Institute of Supply Management reported that U.S. services index slid to a 11-month ow of 59.9% in January. The consensus estimate was 60. December’s reading was 62%. The rapid spread of Omicron variant of coronavirus was the primary reason for a drop in index’s reading.
Factory orders in December dropped by 0.4% compared with the consensus estimate of a drop of 0.3%. November’s data was revised upward from an increase of 1.6% to 1.8%.
Unit labor cost increased 0.3% in fourth-quarter 2021 compared with the consensus estimate of 1.3%. Third-quarter’s data was revised down to 9.3% from 9.6% reported earlier.
The preliminary estimate of nonfarm productivity in fourth-quarter 2021 jumped 6.6% compared with the consensus estimate of 3.6%. Third-quarter’s data was revised from a decline of 5.2% to a decline of 5%.